News Release 09-13-2000
GRAY DAVIS, Governor
WILLIAM KENEFICK, Acting Commissioner
California Escrow Law Protects Online Consumers
Sweep of Online Escrow Companies Shows Risks
Sacramento, September 13, 2000 –The California Department of Corporations today announced the results of a sweep of online escrow companies offering their services on the Internet. The department’s action seeks to bring the companies into compliance with the California Escrow Law.
Since March 2000, the department has issued 27 orders to companies offering escrow services to the public on the Internet, requiring them to obtain a License or to stop offering their services in California. Two additional companies have obtained Licenses voluntarily. Of the orders issued, six of the companies are in California and 13 are in other states. All but three companies have obtained Licenses, pulled their websites or put disclaimers on their websites that their services are not available in California. In addition, eight companies in Canada, Mexico and Australia have been contacted and efforts are proceeding to notify them of state requirements and to bring them into compliance with California law.
The Escrow Law regulates independent escrow companies in California and provides important protections to California consumers. State law requires licensing of companies that act as a middleman and hold customer funds in a trust account until the confirmation of delivery of goods, services, or the performance of a promised action has been completed.
The licensing and regulatory process ensures that companies, their owners and key employees have been subject to background checks, that their financial records are in proper order, and that all customer funds are segregated in trust accounts until the terms of the escrow are met.
According to the Internet Fraud Complaint Center, which went online in May 2000 at www.ic3.gov/default.aspx, online auctions accounted for 48.8 percent of complaints received to date, and another 19.2 percent of complaints related to non-delivery of goods ordered online.
Department regulators say that online escrow companies can provide an important consumer protection function and reduce the risks for California residents that order goods, services, or transfer property online. The department protects consumers from victimization by escrow companies promising to perform middleman services they do not intend to complete. That is why state regulators insist that all online escrow companies that offer their services in California follow the rules laid down by the Legislature to protect consumers under the financial services laws of this state.
Attached is a fact sheet containing a list of the companies Licensed to provide escrow services online, otherwise operating within the requirement of the law, and to which Desist and Refrain orders were issued during the sweep.
The Department of Corporations is California’s Investment and Financing Authority, reporting to the Business, Transportation and Housing Agency and the Governor. The Department is responsible for the regulation, enforcement and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial Finance lending and residential mortgage lending. For further information or to obtain a complaint form, see the Department’s Web site at www.dfpi.ca.gov.
The documents below are lists of the companies Licensed to provide escrow services online, otherwise operating within the requirement of the law, and to which Desist and Refrain orders were issued during the sweep. In order to view the documents you will need to have Adobe Acrobat Reader installed on your computer, which is free. Connect to Adobe’s website and complete “ALL” download steps, this is a one-time setup. After completion of setup, you will have the ability to view and print ANY PDF file. You can download the PDF file to your system to view, or you can view on-line.